European base metals explorer, Zinc of Ireland NL advised the market on Thursday morning that it had received final clearances to commence its Phase 2 drilling program at the 100% owned Kildare MVT zinc project.
As a backdrop, this is not just a highly prospective resource in terms of the volume of mineralisation and robust grades that have been delineated to date, but it also hosts Mississippi Valley Type ore which is recognised by the industry as particularly easy to treat from a metallurgical perspective.
The other aspect to Kildare that has investors optimistic is the fact that the project is on the Rathdowny mineralised trend, 80 kilometres along strike from Lisheen (22.4 million tonnes grading 11.6% zinc) and among some of the world’s leading zinc players.
From a macro perspective, ZMI is targeting the right mineral at the right time with LME zinc stockpiles at 12 year lows and the zinc price not too far off the nine year high price of nearly US$3000 per tonne (US$1.33 per pound) struck as recently as mid-February.
Consequently, it isn’t surprising that the company’s share price has increased more than 50% since the start of the year.
Although, ZMI is still in its early days and its past performance should not be taken as an indication of future performance. Investors should seek professional financial advice if considering this stock for their portfolio.
Though there has been the usual lag in news flow between the finalisation of the 2016 drilling program and the commencement of this year’s campaign, the positive results from maiden drilling at Kildare, which demonstrated wide high grade zinc intersections and new mineralised sections at depth, is obviously at the forefront of investor’s minds as the company prepares to commence drilling around March 10.
Having received final approvals for the upcoming program from the Exploration and Mining Division of Minerals Ireland, ZMI has engaged the largest provider of diamond drilling services in Ireland and the UK to undertake the upcoming program.
This will be a substantial exploration initiative with 3000 metres of diamond drilling designed to test multiple prospects, including extensions of mineralisation at previously drilled prospects and a number of newly identified high priority exploration targets.
With this level of extensive exploration taking place, there is the prospect of potentially market moving news.
Of significance will be the McGregor prospect where thick intercepts of high grade zinc lead mineralisation were delineated late last year, and newly identified structures coincident with deep overburden anomalies and surface soil anomalies.
ZMI has already demonstrated its ability to look outside the square in terms of considering the prospect of new targets. Its decision to undertake deeper drilling in its Phase 1 program paid dividends, and the full rewards of that initiative should come to light in coming weeks.
There are several aspects of any exploration program which are potential share price catalysts, and in ZMI’s case all of these are in play.
Firstly, there is scope to prove up the size of the resource within current bounds, and in so doing establish new grades. There is also the possibility of locating new mineralisation outside known parameters through step out drilling, but more specifically given ZMI’s deep drilling success in 2016, identifying new high grade ore at depth below current mineralisation.
Drawing together this information, there is the prospect that ZMI will be able to establish a JORC compliant resource in the near term (particularly at McGregor) and identiy greenfield targets that have the potential to add to that resource.